Gaurav Kashyap

Last October was the end of the record six-year quantitative easing programme, during which the Federal Open Market Commission built up a balance sheet in excess of $4.5 trillion.

In its third consecutive month of gains, the Dollar Index is approaching levels last reached in 2010, and technically a move towards 88.64 will be next up for the currency.

The Dollar Index, a measure of the value of the dollar against a basket of major currencies, gained 1.58 per cent last month to close at 82.748, its highest level in more than a year.

Markets sold off rather aggressively last month as a host of improving US data made for increased flows into the dollar and kept higher-yielding assets in check.

Developments from the US Federal Reserve and the US economic docket kept investors cautious on the near-term outlook of the US economy.

Mixed performance from the greenback, while euro touched lowest since January.

US economic output for the period of January to March came in last week at a dismal 0.1 per cent, far below expectations of 1.2 per cent, and below the previous reading of 2.6 per cent.

Largely status quo with leading currencies and US equities petering out.

Markets rebounded in February, erasing January's losses. But two major unknowns – the size of the US taper, and the global direction of prices – loom over March.

Despite a better-than-expected earnings season in the United States, a severe meltdown in emerging markets contributed to the risk-off sentiment growing like a dark cloud over global financial markets.

This month should provide good opportunities in the short term, but the outlook is mixed for the first quarter.

Instead of taking markets higher, better than expected data flow in recent months has increased anticipation of a Fed taper sooner than later and this pattern is expected to continue into next year

The existing trend of cheap liquidity and over-inflated equity markets will continue to push markets to newer highs through the end of this year.

D-Day approaches in Washington, and a taper before next year’s first quarter appears unlikely as the US jobs market is yet to gain enough traction and create enough jobs to justify any easing this year.